VALUATION STANDARD 3-
The critical importance of a Valuation Report, the final step in the
valuation process, lies in communicating the value conclusion and
confirming the basis of the valuation, the purpose of the valuation,
and any assumptions or limiting conditions underlying the valuation.
The analytical processes and empirical data used to arrive at the
value conclusion may also be included in the Valuation Report to
guide the reader through the procedures and evidence that the Valuer
used to develop the valuation.
The Valuation Report indicates the value conclusion.
contains the name of the Valuer and the date of the valuation. It
identifies the property and property rights subject to the valuation,
the basis of the valuation, and the intended use of the valuation.
discloses all underlying assumptions and limiting conditions,
specifies the dates of valuation and reporting, describes the extent
of the inspection, refers to the applicability of these Standards and
any required disclosures, and includes the Valuer’s signature.
1.3 Because of the key role of
the Valuation Report in communicating the conclusion of a valuation to
users and third-party readers, this Standard sets forth the following
as its principal objectives:
To discuss reporting requirements consistent with professional
1.3.2 To identify essential
elements to be included in Valuation Reports.
2.1 The reporting requirements
addressed in this Standard apply to all types of Valuation Reports.
2.2 Compliance with these
reporting requirements is incumbent upon both Internal and External
Some instructions involving valuations undertaken for specific
purposes and property types, e.g. financial reporting, and lending,
may differ from those given for other assignments. The reader is
advised to consult those sections of the International Valuation
Standards (IVSs) that address these situations, i.e. International
Valuation Application 1
2 (IVA 1 and IVA 2).
Valuation Report. A document that records the instructions for
the assignment, the basis and purpose of the valuation, and the
results of the analysis that led to the opinion of value. A Valuation
Report may also explain the analytical processes undertaken in
carrying out the valuation, and present meaningful information used
in the analysis.
Reports can be either oral or written.
type, content and length of a report vary according to the intended
user, legal requirements, the property type, and the nature and
complexity of the assignment.
terms, Valuation Certificate and Valuation Report, are
sometimes used interchangeably. As used in some States (for example,
the UK), the term Valuation Certificate designates a document
in which the Valuer
the amount of the valuation of the property.
Valuation Certificate is usually a short letter, though it may
also take the form of a detailed report. It includes the valuation
date; purpose of the assignment; date of the certificate; assumptions
upon which the valuation is based; and the name, address and
qualification of the Valuer.
of Value as used in other States (for example, the US) is a
statement in which the Valuer affirms that the facts presented are
correct, the analyses are limited only by the reported assumptions,
the Valuer’s fee is not contingent upon any aspect of the report,
and the Valuer has performed the valuation in compliance with ethical
and professional standards.
Oral Report. The results of a valuation, verbally communicated
to a client or presented before a court either as expert testimony or
by means of deposition. A report communicated orally to a client must
be supported by a work file and at a minimum followed up by a written
summary of the valuation.
3. 3Written Report. The
results of a valuation communicated to a client in writing, which
includes electronic communication. Written reports may be detailed
narrative documents containing all pertinent materials examined and
analyses performed to arrive at a value conclusion or abbreviated
pertinent narrative documents, including periodic updates of value,
forms used by governmental and other agencies, or letters to clients.
to Business Focus 2, Reports, Content and Compilation.
Specifications for the Valuation Assignment. The first step in
the Valuation Process, which establishes the context and scope/extent
of the assignment and resolves any ambiguity involving the valuation
issue or problem. The term is similar to valuation brief as
used in some States. A Valuer ensures that the analyses, information
and conclusions presented in the report fit the specifications for
specifications for the value assignment include the following
An identification of the real, personal (plant and machinery;
furniture, fixtures, and equipment), business or other property
subject to the valuation and other classes of property included in
besides the primary property category;
An identification of the property rights (sole proprietorship,
partnership, or partial interest) to be valued;
The intended use of the valuation and any related limitation; and
the identification of any subcontractors or agents and their
A definition of the basis or type of value sought;
The date as of which the value estimate applies and the date of
the intended report;
An identification of the scope/extent of the valuation and of the
An identification of any contingent and limiting conditions upon
which the valuation is based.
Compliance Statement. An affirmative statement attesting to
the fact that the Valuer has followed the ethical and professional
requirements of the IVSs Code of Conduct in performing the
some States, a Compliance Statement is known as Certification of
Value. For the contents of a Compliance Statement, see paragraphs
5.1.11 and 184.108.40.206 below.
Special, unusual, or extraordinary assumptions.
completing the acquisition of a property, a prudent purchaser in the
market typically exercises due diligence by making customary
enquiries about the property. It is normal for a Valuer to make
assumptions as to the most likely outcome of this due
diligence process and to rely on actual information regarding such
matters as provided by the client. Special, unusual, or
extraordinary assumptions may be any additional assumptions
relating to matters covered in the due diligence process, or may
relate to other issues, such as the identity of the purchaser, the
physical state of the property, the presence of environmental
pollutants (e.g., ground water contamination), or the ability to
redevelop the property (see para. 5.1.7 below).
Relationship to Accounting Standards
4.1 Where applicable, the
Valuation Report shall meet or exceed the requirements of the
International Financial Reporting Standards (IFRSs)/International
Accounting Standards (IASs) and International Public Sector Accounting
4.2 Valuation for Financial
Reporting, which is the focus of IVA 1, should be read in conjunction
with this Standard.
Statement of Standard
perform valuations that comply with these Standards and Generally
Accepted Valuation Principles (GAAP), it is mandatory that Valuers
adhere to all sections of the IVSs Code of Conduct pertaining to
Ethics, Competence, Disclosure, and Reporting (sections 4, 5, 6, and
5.1 Each Valuation Report
clearly and accurately set forth the conclusions of the valuation
in a manner that is not misleading;
identify the client, the intended use of the valuation, and
the date as of which the value estimate applies,
the date of the report, and
the date of the inspection;
220.127.116.11 Date of Valuation
valuations undertaken by Members must be assessed as at the date of
inspection of the property except where the valuation instructions
are to assess the value at a retrospective date.
a retrospective valuation is reported, the date of the valuation must
be recorded next to or immediately above or below the valuation
figure in the report.
all other cases the valuation date must be clearly linked to the
valuation figure in the report.
Member must not provide an assessment of Market Value at a future
date. This does not preclude members from making residual value
forecasts for plant & equipment leasing transactions.
a valuation is required for financial reporting purposes at a future
date, the valuation shall be recorded as at the date of inspection
may make comment on the use of that valuation as at that future date
subject to the relevant factors influencing the value and the
property being unchanged as at that future date.
these circumstances, a Member shall include an appropriate
qualification to the valuation.
Market Value and Non-Market Value shall be separately
reported when any property component(s) in the valuation are valued
on a basis other than Market Value.
specify the basis of the
valuation, including type and definition of value:
identify and describe the:
property rights or interests to be valued,
physical and legal characteristics of the property, and
classes of property included in the valuation other than the
primary property category;
describe the scope/extent of the work used to develop the
specify all assumptions and limiting conditions upon which the
value conclusion is contingent;
identify special, unusual, or extraordinary assumptions and
address the probability that such conditions will occur;
include a description of the information and data examined, the
market analysis performed, the valuation approaches and procedures
followed, and the reasoning that supports the analyses, opinions, and
conclusions in the report;
contain a clause specifically prohibiting the publication of the
report in whole or in part, or any reference thereto, or to the
valuation figures contained therein, or to the names and professional
affiliation of the Valuers, without the written approval of the
include a Compliance Statement that the valuation has been
performed in accordance with IVSs, disclose any departure from the
specific requirements of the IVSs and provide an explanation for such
departure in accordance with the IVSs Code of Conduct:
Each compliance statement shall confirm that;
statements of fact presented in the report are correct to the best of
analyses and conclusions are limited only by the reported assumptions
Valuer has no (or if so, a specified) interest in the subject
Valuer’s fee is or is not contingent upon any aspect of the report;
valuation was performed in accordance with an ethical code and
Valuer has satisfied professional education requirements;
Valuer has experience in the location and category of the property
Valuer has (or has not) made a personal inspection of the property;
one, except those specified in the report, has provided professional
assistance in preparing the report;
of these aspects, in either the valuation report, a Supporting
Memorandum or contractual agreement will meet the requirements of
include the name, professional qualifications, and signature of
When Valuation Reports are
transmitted electronically, a Valuer shall take reasonable steps to
protect the integrity of the data/text in the report and to ensure that
no errors occur in transmission. Software should provide for security
The origin, date and time
of the sending as well as the destination, date and time of receipt
should be identified. Software should allow confirmation that the
quantity of data/text transmitted corresponds to that received and
should render the report as ‘read-only’ to all except the author.
The Valuer should ensure
that the digital signature(s) is/are protected and fully under the
Valuer’s control by means of passwords (PIN numbers), hardware devices
(secure cards), or other means. A signature affixed to a report
electronically is considered as authentic and carries the same level of
responsibility as a written signature on a paper copy report.
A true electronic and/or
paper copy of an electronically transmitted report must be retained by
the Valuer for the period required by law in his or her jurisdiction,
in any event not less than five years. Files of the records of
electronically transmitted reports may be kept on electronic, magnetic,
or other media.
The type, content, and length of a report depend on the intended user
of the report, legal requirements, property type, and the nature and
The presentation of a
Valuation Report is decided by the Valuer and the client based on the
instructions or specifications for the assignment.
of the valuation issue or problem.
For all Valuation Reports, sufficient documentation must be retained
in the work file to support the results and conclusions of the
valuation and must be held for a period of at least five years after
5.6 Value as if Complete
a Member undertakes a valuation of a proposed building or other
improvement the valuation must be expressed as “Value As If
Complete” and appropriate cautions, including the requirement for a
final inspection by the valuer on completion to confirm or vary the
valuation figure, shall be included.
“Value As If Complete” valuation must be the market value at the
date of inspection.
Member shall not undertake a valuation on an “As If Complete”
basis without appropriate and sufficient documentation.
a Member undertakes a valuation of a property on the assumption of a
proposed lease (or multiple leases), the valuation must be subject to
appropriate cautions, including the requirement for
and execution of the lease(s) in accordance with the original
5.7 Sale in One Line or Single Transaction
a valuation is undertaken of multiple properties in one development
the sum of the individual values must not be reported as the value of
the development, but if aggregated must be reported as the total
Sale In One Line valuation must be based on the assumption of a
single transaction for the total holding or a sale in one line to one
5.8 Goods and Services Tax
Australia a valuation shall be expressed as being GST inclusive, GST
exclusive or GST free.
New Zealand non-residential valuations shall be stated as plus GST
(if any) and residential valuations shall be stated as including GST
exceptions to the standard treatment of GST shall be clearly stated.
The context in which a
valuation figure is reported is as important as the basis and accuracy
of the figure itself. The value conclusion should make reference to the
market evidence, and procedures and reasoning that support that
Communicating the answer
to the valuation question in a consistent and logical manner demands a
methodical approach that enables the user to understand the processes
followed and their relevance to the conclusion.
The report should convey
to the reader a clear understanding of the opinions being expressed by
the Valuer and also be readable and intelligible to someone with no
prior knowledge of the property.
The report should
demonstrate clarity, transparency, and consistency of approach.
The Valuer should exercise
caution before permitting the valuation to be used other than for the
originally agreed purpose.
When valuations are made by an Internal Valuer, specific disclosure
shall be made in the Valuation Report of the existence and nature of
the relationship between the Valuer and entity controlling the asset.
If a Valuer is involved in a valuation assignment in a capacity other
than as a Valuer, for example, as an independent or impartial agent,
as a consultant or advisor to a business entity, or as a mediator,
the Valuer should disclose the specific role taken in each
7.3 The Valuer shall disclose
the regulatory framework and any departure required from these
Standards to comply with local legislation, regulation (including
accounting rules), or custom.
No departure is permissible from the requirements that each Valuation
Report clearly and accurately set forth the conclusions of the
valuation, and clearly disclose any assumptions and limiting
conditions, which affect the valuation and value conclusion.
8.2 If a Valuer is asked to
perform an assignment that departs from these requirements or calls for
something less than, or different from, the work normally performed in
compliance with the IVSs and the IVSs Code of Conduct, the Valuer
should accept and perform such services only when the following
conditions can be met:
The Valuer determines that the instructions will not tend to mislead
the intended users.
The Valuer determines that the valuation is not so limited that the
results are no longer reliable and credible for the intended purpose
and use of the valuation.
8.2.3 The Valuer advises the
client that the instructions for the assignment involve a departure
from the Standards that must be disclosed in full in the Valuation
8.3 In any circumstances
involving a departure from the reporting of Market Value, the
Valuer should clearly identify that the valuation reported is other
than Market Value.
This International Valuation Standard became
31 January 2005.